GI Bill in uniform: Use it and lose it

Mar. 25, 2013 - 07:45AM
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(Getty Images)

Tuition assistance may have been revived — at least for this fiscal year — but if the program comes into the budget-cutting crosshairs again, you may want to think twice before using your GI Bill benefits as a replacement, at least while you’re still on active duty.

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Tuition assistance may have been revived — at least for this fiscal year — but if the program comes into the budget-cutting crosshairs again, you may want to think twice before using your GI Bill benefits as a replacement, at least while you’re still on active duty.

It could cost you big-time: In some cases, the Post-9/11 GI Bill can be only half as valuable when used in uniform compared with after you separate.

The big hit comes in the new GI Bill’s generous housing stipend, which is not available to troops on active duty. The stipend varies depending on regional housing costs, but it averages $1,400 to $1,500 per month nationally, Veterans Affairs Department officials said.

For a vet, that stipend comes in addition to — and is roughly equal to — the amount of money the Post-9/11 GI Bill will pay for school tuition.

Over the 36 months of benefits offered under the GI Bill, that could add up to more than $50,000 for average full-time student veterans — all of it down the drain if you burn through the benefits before getting your discharge papers.

On top of that, the new GI Bill will pay for only part of the tuition if you start using it before completing three years in the military.

If you’ve hit that three-year mark, and you’re willing to forgo 36 months of Uncle Sam paying your rent to finish your education while in the military, and start working full-time immediately after your discharge, the GI Bill could be a viable active-duty option. But it probably shouldn’t be your first.

In a TA-free environment, your first move should be to complete a Free Application for Federal Student Aid, or FAFSA, to try to get a grant through the government’s main civilian student aid apparatus, said Ryan Gallucci of the Veterans of Foreign Wars.

“Fill out your FAFSA form. See if you’re eligible for financial aid,” Gallucci said. “Don’t be afraid to tap into your [GI Bill] benefits — but it should be a last resort.”

VA officials caution that the rules governing GI Bill benefits are numerous and complex, and advise service members to think through the pros and cons for their circumstances.

“The Post-9/11 GI Bill probably has well over 2,000 business rules in there,” said Curtis Coy, VA’s deputy undersecretary for economic opportunity.

And on top of that, there’s a whole other version of the GI Bill to consider.

The two GI Bills

While the Post-9/11 program is the newer — and in most cases, more generous — VA education benefit, many troops also still pay in $1,200 when they join the military to be eligible for the older Montgomery GI Bill.

Troops can later transition from that program to the newer version, but for some people, the Montgomery GI Bill may make sense.

Currently, the MGIB pays full-time college and university students $1,564 per month for tuition. You receive only 75 percent of that if you’re using the benefit for apprenticeships and on-the-job training, and, like the Post-9/11 program, you receive a smaller level of benefits if you’ve served fewer than three years on active duty.

Over 12 months, the MGIB’s tuition cap for full-time students is $18,768, which is similar to the Post-9/11 program’s current annual cap of $18,077.50 for private schools.

Post-9/11 students attending public universities are typically covered for the entirety of the school’s in-state tuition.

For most vets, Post-9/11’s advantage over the MGIB is that big housing allowance. The MGIB doesn’t have that, although qualifying veterans get the full monthly benefit of $1,564 even if they attend a school with cheaper tuition — which means they can pocket the difference to pay for housing and books.

But just as the Post-9/11 housing allowance disappears for active-duty service members, the ability to keep MGIB money above the cost of tuition vanishes when you’re using it on active duty, VA said.

For active-duty members, if your tuition costs less than the MGIB cap, you simply get less money — even if you paid extra for the GI Bill’s “top-up” option.

Under that feature, troops can pay up to $600, in addition to the standard $1,200 buy-in fee, to increase the monthly amount the MGIB provides for education.

For veterans who get to keep the difference at low-tuition schools, the top-up can make the MGIB a better deal. But for active-duty troops who can’t pocket the difference, it’s just wasted money unless they’re attending an expensive school.

The Post-9/11 GI Bill has no top-up option.

When is a month not a month?

While you could easily get shortchanged on housing money by using the new GI Bill while on active duty, there is less need for concern that you’d waste your tuition help by going to school part-time instead of full-time, which is often the only option if you’re also working for Uncle Sam full-time.

Both the Post-9/11 and MGIB provide 36 months of education benefits. But that’s not just typical months on the calendar; it really means 36 months of attending school full-time.

VA officials explained that the rate of benefit usage is pro-rated based on your course load. So taking a full slate of classes — typically four classes or 12 credit hours — for a four-month semester would cut your remaining benefits from 36 months to 32 months. But if you only take half of that course load for the same period of time, you’ll only burn two “months” of benefits.

Depending on what school you attend and which version of the GI Bill you are using, VA may calculate part-time attendance slightly differently, but you can generally expect your benefit usage to scale with the number of credit hours you’re carrying.

Burn rates come into play more prominently for troops who tap their GI Bill benefits before acquiring the 36 months needed to qualify for full benefits.

For example, if you tap into the Post-9/11 GI Bill to pay for your education within six months of joining the military, you’ll get only 40 percent of the tuition coverage you could expect after completing three years of service.

At six months of service, you’d get 50 percent of the full payment rate; after 12 months, 60 percent; and so on, until you reach the 100 percent level at three years, VA officials said.

While you’d get a fraction of your education paid for, you’d be burning through as much of your benefits as you would if you waited until the three-year mark and had 100 percent coverage.

An exception to the three-year requirement grants full benefits to troops with service-connected disabilities who served at least 30 continuous days on active duty.

The MGIB works a little differently for people with less than three years of service, but you can similarly expect to get much less tuition help while your benefits burn at full flame.

With both versions of the GI Bill, you also get less coverage if you attend correspondence or flight schools.

‘Do your research’

The Post-9/11 GI Bill also offers up to $1,000 per year to pay for books, whether you’re using it as a veteran or on active duty. The amount is scaled to the size of your course load.

The only way the MGIB can pay for books is if you have money left over from the $1,564 monthly benefit because you attend a low-cost school. Again, that is not available for active-duty service members, who receive only what they need to cover their tuition.

The VFW’s Gallucci and representatives of other veterans groups suggested that active-duty service members look for other ways to pay for college before using their GI Bill in the absence of tuition assistance.

Among the best options besides TA are Pell Grants and low-cost loans available after you fill out the FAFSA; programs other than TA under which the individual services might help pay for your studies; and scholarships offered by schools and private organizations.

“Check. Ask the questions. Do your research. There is no pat answer” that works for everyone, said VA’s Coy.